Lloyds Banking Group has reported flat profits for the beginning of the year as it swallowed £565 million in one-off costs. It also warned that Brexit could take a further toll on the economy of the United Kingdom.
The biggest mortgage lender of the United Kingdom said that it made a pre-tax profit amounting £1.6 billion for the first quarter, little changed as compared to a year ago.
The group owns Lloyds Bank as well as Halifax Bank of Scotland. It said that the size of its loan book shrank by 1 percent, including a £4.9 billion decline in overall home loans assets.
However, there were some improvements to car finance and small business lending.
Its shares dropped by 2 percent in early trading and were 1.3 percent down by the close.
Antonio Horta-Osorio, the Lloyds chief executive, said that it was a “strong business performance.”
He noted: “While Brexit uncertainty persists, and continued uncertainty could further impact the economy, I remain confident that our unique business model… will continue to deliver superior performance and returns for our customers and shareholders.”
The firm said that is underlying profits were up by 8 percent, however, it was affected by a series of one-off charges.
These included £339 million for “banking volatility and other items,” covering the estimated cost of exiting an investment management agreement that was made with Standard Life.
Last March, a dispute over the exit saw a tribunal ruling against the way that the bank terminated the contract early – which analysts said could see Lloyds suffer a massive compensation bill.
The charges also included the latest sum to be added to the multi-billion pound total charge of Lloyds for compensating customers who were mis-sold payment protection insurance (PPI).
It said that the £100 million provision reflected “higher gross complaint volumes” as it continues to handle 13,000 complaints per week, and takes the running total to £19.525 billion.
Lloyds said that it also spent £126 million on restructuring in the period.